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A tale of 2 reviews - a response

27 September 2018

On Thursday 27 September, the review’s Chair David Thodey spoke about his work on 2 public sector reviews for the Allan Barton memorial research lecture.

This is the speech which Gordon de Brouwer delivered in response.

Comments on the Allan Barton lecture by David Thodey on the review of the Public Governance, Performance and Accountability Act 2013

Thank you for the opportunity to comment on David Thodey’s Allan Barton lecture today on the review of the Public Governance, Performance and Accountability Act.

Like David, I would also like to acknowledge with deep respect the traditional custodians of the land we’re meeting on, and to celebrate the contribution of Allan Barton.

I am honoured to work with David on the APS Review and I have developed a deep appreciation for David’s leadership, intellect and engaging style. I am learning a lot from working with him. And I have also benefited from his review of the PGPA Act and Rule. The PGPA Act has come up regularly in the APS review, and David’s lecture today was a welcome incentive for me to re-read the Act and Rule and reflect on public sector governance.

Elizabeth Alexander and David Thodey have made an important contribution in their review.

They outline the importance of the Act and its many successes, the areas where implementation has fallen short of expectations, and some practical steps to improve and strengthen governance.

My comments will work on this structure, and they will draw directly on my own experience as a public servant over 3 decades and as the Secretary — otherwise known as the accountable authority in PGPA speak — of the Department of the Environment and Energy from 2013 to 2017.

The importance of the PGPA Act

I’ll start with talking about just how important the Act is.

The big picture point is that the Australian public service is a bedrock institution of Australia’s liberal democracy. It plays an essential role in supporting the Government and Parliament develop and implement policy, regulate economic and social activity, and in delivering services to the people of Australia. The PGPA Act sets out key elements of how Commonwealth entities must operate and, when this is done well, helps underpin trust in public administration and government in Australia.

We all know that trust is in short supply. Taking the Edelman Trust Barometer as a guide, Australians are generally a distrustful lot. Like only 6 other countries[i] out of the 28 surveyed by Edelman, Australians are net distrusters in the four groups assessed — the media,[ii] government, business and NGOs in that order. Out of the 28 countries surveyed, Australia ranks tenth from the bottom in trust in government. The legal requirements of the PGPA Act on ministers and officials, including the transparency that comes with corporate planning and annual reporting, are powerful instruments to counter disillusion and support trust in Australia. We should spruik just how strong and robust this system of public governance is.

I’m sure you will appreciate that senior public servants don’t publicly advertise their differences with Ministers but differences do occur on policy, which the Public Service Act governs, and on the administration and management of public institutions, which the PGPA Act governs.

Accountable authorities (Secretaries) rarely play out their differences with Ministers in public. When there are differences of view in how a department is to be managed, the PGPA Act sets out a principles-based framework to resolve that difference, which can mean that either the Minister’s or the Secretary’s views prevail. Examples of the areas where views may differ are internal departmental allocations and priorities and staffing. In many instances, differences of view are resolvable by proper conversation and understanding the needs or intent of the other and possibly how those needs may be met in other ways.

When the Minister and Secretary still have different views about these matters, the Secretary will have recourse to those sections of the PGPA Act that govern the responsibilities and relationships between Minister and Secretary.

The legal obligation on the Secretary is:

  • to promote the proper use and management of public resources (s15) where proper is defined as efficient, effective, economical and ethical (s8)
  • to do so in a manner that is not inconsistent with government policy (s21), is reasonable (s25) and is honest and in good faith (s26)

From my observations over the past decade of interactions between Ministers and Secretaries, in those unusual cases where Ministers and Secretaries still had different views about management after discussion, the proper course of events is for the Secretary to refer back to their separate responsibilities under the law for proper management of public resources and why they are taking a different course.

The PGPA Act has done its job.

But, on reflection, there are two things that cause me disquiet.

The first is the consistency of the decision making by accountable authorities. Do Secretaries exercise their responsibilities properly in all instances when there is a difference of view? Do Secretaries exercise those responsibilities in a similar way, and to what extent? What is the benchmark and who assesses it? Secretaries do phone a friend in these sorts of cases, like a trusted Secretary colleague, the Secretary of Prime Minister and Cabinet and head of government division or group, or the public service commissioner or deputy. But it is deeply informal and we do not know where the resolution line is drawn on differences between Ministers and Secretaries and whether it is consistent across public administration. I think that is a problem.

My second concern is a sense that the boundary is shifting between the necessary, healthy and welcome interest of a Minister in the staff and structure of his or her department and the intent of a Minister to appoint senior staff (even to senior executive service band 1 level) and decide the structure of the department.

This shift may reflect a deeper concern by Ministers about capability and adequate focus on the challenges they face, but deep ministerial reach into staffing and structure of a department risks undermining the apolitical nature of the public service, the ability of Secretaries to ensure that their departments meet community standards (like work, health and safety requirements and codes of conduct), and the proper administration of public resources.

One way to address the concerns about consistency and shifting boundaries in the relationship between Ministers and Secretaries in the administration of a department is to be explicit in the PGPA Act that decisions about staffing and department structure are the responsibility of the Secretary. This would set a benchmark across the public service and provide confidence in consistency and political impartiality.

In saying this, I am not understating the concerns Ministers may have about capability and responsiveness but these concerns can be addressed by other means, including through the review of the APS led by David Thodey without risk of undermining the apolitical nature of the public service.

Room for improvement

While the independent review is clear about the value of the PGPA Act, it is critical of some aspects of the implementation of the Act. The review nicely stresses the importance of leadership and culture in the art of good governance, expresses its concern with the complexity and duplication of reporting, and judges that the public sector’s management of risk is immature. The criticism is fair, and I would like to focus on the service’s risk culture.

The public service has come a long way since the PGPA Act came into effect in 2014. The preparation of corporate plans, articulation of risk appetites, and performance reporting in annual reports, subject to the scrutiny of Estimates and the Audit Office, have all provided an opportunity to re-direct the focus and effort of the public service to outcomes (rather than inputs and outputs) and think about and implement open and risk-based systems to achieve them.

Let me recount two anecdotes of how I saw things change in my department because of the PGPA Act.

When we first started discussing risk appetite statements in 2013, one very strong response was ‘Just don’t go there! We can only lose. We’ll be crucified if anything goes wrong in an area where we say we accept risk.’

This sparked off a long conversation about:

  • where the department’s risks lay
  • what our risk assessment and mitigation systems were and their effectiveness
  • where the real bottom lines on risk lay — death of staff and the public was the risk that immediately emerged as the one we had zero tolerance for
  • how staff thought about and took responsibility for risk
  • how to explain risk publicly
  • how we could use success and failure to embed a culture of responsibility and learning, rather than blame

Preparation of a risk-appetite statement was a tremendous opportunity to engage staff about risk. I think it was transformational and liberating.

It proved essential to back words with action, including:

  • systematic and wide-ranging devolution of responsibility, especially financial and briefing delegations
  • professional development including co-design, development and use of practical risk-based outcomes-focused compliance frameworks
  • backing staff when mistakes were made, most publicly for me when an environmental approval for the Carmichael mine had to be remade because of administrative error by the department
  • staff having authority to change tack when circumstances changed or evidence showed the approach was not working

Risk appetite statements are internal documents but they should be public.

The second anecdote is how the language about internal compliance changed. The deeply ingrained response of governance and compliance officers is to set out desired behaviors as rules that must be obeyed. The typical phrasing in internal documents was to set out lists of “you must do x, y, z” and staff responded by ticking the box.

Over time, the language with staff shifted to doing x, y, z as ways for staff to manage risks in their area of work. Internal governance became more of an enabler of risk management by officers on the ground, internalising practical risk management as part of doing their job.

Following the Shergold Report, the department created a Chief Risk Officer to comprehensively lead risk management and cultural change, and she did a tremendous job. Elizabeth and David’s recommendation of agencies creating a Chief Risk Officer should be strongly welcomed and provides a great opportunity to shift the system and drive further cultural change.

These changes were driven by the introduction of the PGPA Act.

Yet there is a fair way to go. Cultural change is an ongoing, not one-off, process. The tendency in the public service to revert to command and control in risk management is atavistic and deep. I suspect everyone who has run a department or agency has their own experience, but a good illustration of reversion to command and control across the whole Australian public service is the failure to achieve the promise of earned autonomy in the PGPA Act reform.

The PGPA explanatory memorandum held out the promise of greater autonomy for departments and agencies that managed themselves well. Yet there has been no follow up. I think it is missing in the review because the stewards of public management reform are unsure about how to integrate performance management in their own oversight and are reluctant to lessen control. Despite their better natures, the operational cultures of Finance and the Audit Office too often drag them back to command and control, detail and standardisation.

There are ways to differentiate management and reporting of governance, performance and accountability. To me, an obvious way is to ease back on the minutiae and detail of financial reporting to Finance in the preparation of budget bids. Does a department that is well-managed on PGPA criteria, for example, really have to submit three quotes for car hire for each trip by public servants from Canberra to Albury as part of its budget bid for a natural resource management project with farmers in southern NSW? Does a well-performing agency that is introducing an experimental IT project to manage water use more efficiently in South Australia really have to submit a detailed costing and outcomes plan that cannot be varied without detailed written explanation and approval?

And there are ways to use management performance as a basis for experimentation, innovation and greater risk taking that improve social and economic outcomes. Consider, for example, the use of public assets by Aboriginal communities in remote parts of the Northern Territory. Public servants can’t use public assets for private purposes. Can a ranger use a departmental boat to take children in a remote community to school during the wet season? Can a Parks Australia officer use a departmental vehicle to take some members of a remote community shopping for food in town on a weekend? In a well-performing entity, surely there are flexible ways that recognise kinship obligations and ensure the proper performance of public bodies? In this instance, experimentation and trial, perhaps through the use of community service obligations, can be a way to build up confidence, lift capability in local communities and show respect for the culture of Aboriginal and Torres Strait Islander people.

The point is that earned autonomy is possible. But it requires those central agencies that oversee financial and performance management themselves to be committed to the spirit of the PGPA Act, to genuinely integrate budget and governance priorities in their own approach, and to ensure that the operational cultures of budget and governance are coherent and consistent. In terms of good governance, I wonder if the evaluation of Finance’s implementation of the PGPA Act should be made to Prime Minister and Cabinet rather than Finance. Indeed, the effectiveness of the integration of budget and governance responsibilities in Finance and the implementation of the PGPA Act by Finance (including in spirit) would seem to be relevant areas for any future capability review.

Some practical steps to improve governance

Elizabeth Alexander and David Thodey make 52 good recommendations to improve governance. As you can guess, I would have liked a fifty-third recommendation on earned autonomy, but I don’t want that thought to detract from my view that this is a timely and well-targeted review. I do have a reservation about the recommendation that all members of audit committees be from outside the public sector. I appreciate why they suggest this but I am concerned about losing the proven insight and contribution that serving senior public servants from other departments or agencies can bring to the table; Canberra is a small place.

I particularly like the recommendations for Government policy statements as allowed in s34 of the Act, the reporting of executive pay, contracts and consulting, implementation of digital reporting, and the use of Chief Risk Officers.

On Government policy statements, this could have deeper value as a way for a government to give the public a better sense of its own purpose (and hopefully counter growing cynicism about politicians), to focus the public service on achieving tangible outcomes that actually improve the lives of the Australian people, and to require the different silos of the public service to work together, and with others more generally, to achieve outcomes. There are clear synergies with the APS Review (which I am sure are not accidental).

On reporting the details of executive pay, contracts and consultants, these are welcome step in improving public transparency and accountability, something which Transparency International says has deteriorated in Australia in recent years (from a corruption perceptions score of 85/100 in 2012 to 77 in 2017). It is, again, a way to improve accountability, put more discipline in setting pay at senior levels, and lift public trust in government and public administration.

Let me finish with thanking and congratulating David and Elizabeth for their valuable report.

Thank you.


[i] The other six are Germany, Ireland, Russia, Sweden, United Kingdom and the United States.

[ii] Australia is the second-most distrustful country of the media, after Turkey, in the Edelman survey.